One of Toronto’s most successful software entrepreneurs, Kirk Simpson, is stepping down as CEO of Wave Financial Inc., the company he co-founded 12 years ago and sold to H&R Block, Inc. for $405 million in 2019.

Simpson, 47, said the decision was “100% mine” and comes shortly after Wave, now an independent small-business software unit of the US tax giant, reported annual revenue of C$100 million for the first time. time.

“It seemed like a perfect opportunity to transition and bring in someone who could lead it in its next round of growth,” said Simpson, who is taking a few months off and has plans to start another company. He declined to share details about his upcoming startup.

Mr. Simpson will be succeeded by Zahir Khoja, who most recently served as general manager of North America for Afterpay Ltd., the Australian buy-now-pay-later e-commerce consumer finance giant. Zahir, who has an entrepreneurial spirit, is a leader in the fintech industry and is ready to guide Wave’s future success,” H&R Block CEO Jeff Jones said in a statement.

“The pandemic has shown us that small businesses are crucial to the health of the economy and our local communities,” Mr. Khoja said in a statement. “They are a group worth fighting for and more of them need the financial management tools that Wave provides.”

Wave was a major player in the Canadian technology start-up sector in the wake of the 2008-09 recession. At the time, the domestic sector was reeling from the demise of Nortel Networks, while BlackBerry Ltd was losing its early lead in the global smartphone race. What remained were largely capital-hungry companies at risk of being picked up by foreign buyers at bargain prices, branches, and a few small startups with names like Shopify, Hootsuite, Lightspeed, and Wave. Technology companies accounted for just one percent of the S&P/TSX Composite Index.

Wave started in 2009 offering free cloud-based billing and accounting software for small businesses, quickly and cheaply racking up users. Mr. Simpson originally intended to make money selling advertising on the platform, but it proved to be a challenge. In the early 2010s, the company began offering customers financial services such as bank transfers, online loans, billing, and payroll services through the platform. It was early in the practice of offering so-called integrated financial services, which is now a key value driver for companies selling digital business operating system platforms to small businesses, including Shopify, Lightspeed Commerce, Clio and Jobber.

When pension giant Ontario Municipal Employees Retirement Systems became the first Canadian institutional investor to return to venture capital after the recession in 2011, it made its first investment in Wave. OMERS initially invested as part of a $5 million financing led by Charles River Ventures (now called CRV), which also made Wave one of the first Canadian companies at the time to be backed by a large venture capital firm. US risk

“It’s very common these days for Canadian startups to attract US investment,” said Damien Steel, global managing partner at OMERS Ventures and a former director of Wave. “It wasn’t common back then. It was a great achievement at a time when the Canadian technology market was very small.”

Wave raised $77 million in venture financing and had set out to do another financing in 2018, but ended up selling a year later to H&R Block, a significant “exit” that allowed OMERS to roughly five-fold its $10 million investment.

Wave’s “freemium” model, in which a minority of free customers typically sign up for paid services, has helped fuel the company’s revenue growth, which has nearly doubled since the 2019 acquisition by H&R. Block, and the company has increased employment to 370 people. , of 260. Wave, with 300,000 paying and unpaid customers, mostly in the US, isn’t yet profitable, but Simpson said “there’s a definite path” to get there and declined to share details.

While many tech companies have seen their valuations plummet in recent months, Wave has hedged as New York Stock Exchange-traded shares of H&R Block rose 36 percent in value in the past year. .

Steel credited Simpson for not leaving immediately after the acquisition, but for staying to “complete his vision.” He added: “I can’t wait to see what Kirk does next. He would literally give her a blank check for his next adventure if he so wishes.”

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